Gold price heads for weekly decline on bond yields, dollar strength

Gold fell on Friday as the prospect of aggressive interest rate hikes boosted yields on US Treasuries and the dollar, denting bullion’s appeal and sending prices to their first low in three weeks. .

Spot gold was down 0.44% at $1,942.91 an ounce by 1005 GMT. US gold futures were down 0.2% at $1,945.20.

“We are in a global economy where expectations of interest rate hikes continue to rise, so yields are rising and the dollar is trading higher, all potential challenges for gold right now,” said Ole Hansen. , an analyst at Saxo Bank.

However, “gold remains within the established range. The reason is that the market is concerned that these strong expectations of US rate hikes could lead to a larger-than-expected economic slowdown,” he added.

US Federal Reserve Chairman Jerome Powell said Thursday that a half-point rate hike “will be on the table” when the central bank meets in May and that it would be appropriate to “move a little faster.”

The return of the 10-year US debt extended its advances due to the favorable tone of tightening the Fed’s monetary policy in its effort to control rising inflation. Meanwhile, the dollar index reached a maximum since March 2020.

Gold is highly sensitive to rising US interest rates and rising yields, which raise the opportunity cost of holding bullion while boosting the dollar, in which it is priced.

Gold is down 1.3% so far this week. On Monday, prices rose to approach the key $2,000-per-ounce mark on safe-haven demand and rising inflation concerns, before retreating to hit a two-week low on Thursday.

In other metals, spot silver fell 1.8% to $24.19 an ounce, heading for its biggest weekly drop since late January. Platinum was down 1.3% at $955.28 an ounce and palladium was down 1.4% at $2,388.21.